The time is now for the government to take radical steps over housing

The dual crises of the cost of living and the climate have created a situation where sorting out housing has become a win-win, writes Terrie Alafat

’The government’s starting point should be ensuring that the homes we build today do not become the retrofit projects of the future’ (PA Archive)

The global energy crisis has cruelly exposed the need to make our homes more energy efficient. With net zero calling and energy bills soaring like never before, millions of leaky homes across the UK are crying out for upgrades right now. Fresh thinking on how to breathe new life into our ageing and inefficient housing stock is required as a matter of urgency.

In the Queen’s Speech, there were welcome commitments to introduce legislation on both levelling-up and energy security. However, government policy is still short on practical help for homeowners who would benefit from installing solar panels, heat pumps or cavity wall insulation.

If the government is serious about meeting our net zero emissions targets, as well as alleviating the financial pressure on households from soaring fuel bills, a bolder approach is required to ensure that the status quo does not endure. We need radical action to ensure that both new developments and existing homes have the highest possible levels of emissions reductions. In short, when it comes to housing and net zero, the time has come for ministers to think the unthinkable.

The government’s starting point should be ensuring that the homes we build today do not become the retrofit projects of the future. New build developers are already leading the way with significant steps forward in recent years. The average new build home now emits more than 2 tonnes less of carbon each year than the average existing home and consumers are feeling the benefits with significantly lower energy bills.

However more still needs to be done to remove constraints and enable the transition to net zero to happen at the scale and pace required. In the years ahead, partnerships between developers and government on key areas of policy will be critical in advancing net zero ambitions and encouraging more developments designed to include facilities and infrastructure that support communities to adopt more sustainable lifestyles. Crucially, action should be taken to encourage deeper integration of modern methods of construction that will allow the housebuilding industry to be more self-sustaining in net zero efforts.

When it comes to our existing homes, the task is more challenging. In the average English local authority, most homes are below an EPC band C, the basic benchmark for a moderately energy efficient home. Furthermore, analysis for the Building Back Britain commission shows that for homes with a market value below £162,000, there is little to no incentive for the owner to undertake the energy efficiency improvements that would lead to lower bills. Rather, for these homes, retrofit is likely to be financially unviable without some public subsidy, due to the cost of work exceeding the potential house price gain.

The price problem is most widespread in local authorities designated as levelling up priority areas by government and it is particularly acute in local authorities such as Blackpool, where 9 in 10 homes fall below a critical price threshold. Across England, there are 2.3 million homes in levelling up areas that are below EPC band C and worth less than £162,000.

The reality is that the only way for ministers to make progress will be to provide householders and landlords with 100 per cent government grants funded via public borrowing. To begin with, the focus could be on those homes in levelling up areas where the price problem is concentrated. Our commission estimates that a 10-year programme to get all 2.3 million homes up to EPC C would cost around £2.3bn per year.

As well as new developments and existing homes, government should consult on how to drive demand for more energy efficient properties. This includes improving take-up of green mortgages and reviewing the way we tax residential property to establish whether changes can be made. Government should look at creating a framework which enables local partnerships to work with a range of investment tools which support landlords and homeowners financially, as well as households facing fuel poverty. At the same time, it will need to recognise the challenges posed by older homes beyond realistic repair and build on what has worked in previous regeneration schemes.

By taking the action we suggest, government could have a win-win. Taking radical steps now to make our homes more energy efficient will enable the UK to make much-needed strides forward on the path towards net zero. It would also boost the levelling up agenda with lower fuel bills for millions of people who are suffering because of the energy crisis and urgently need help with the cost of living.

Terrie Alafat is chair of the Building Back Britain commission